Kao benefits from surge in Asia skincare product sales

On Wednesday Japanese cosmetics group Kao reported a 24.2% surge in net income in 2015, and expects to do even better this year, thanks chiefly to its Asian clientele's purchasing drive for lotions, creams and another skincare articles

Helped by favourable exchange rate effects and lower raw material costs, Kao generated a net profit of JPY98.86 billion (€746 million) out of a revenue which rose by 5.0% year-on-year, to reach JPY1.471,8 trillion (€11.3 billion).

Kao stated in a press release that the revenue increase would have been restricted to 2.8% if currency exchange rates had remained stable.

Ads

As for annual operating income, it rose by 23.3%, reaching JPY164.38 billion.

In Japan, where Kao generates two thirds of its revenue, the performance was better in mass market lines, thanks to new, more high-end products and increasingly vigorous promotional campaigns.

Skincare and personal care products also saw their sales rise in Asia (+27.7%) and, by a smaller amount, in the USA (+12.4%) and Europe (+6.7%).

After the first quarter, Kao managed to reverse the negative trend of the very first few months of the year.

It benefited by the growth in Asian clientèle rushing to Japanese stores to buy tax-free, 'Made in Japan' beauty products, which are notably much appreciated by the Chinese.

On the contrary, the revenue of Kao's other major division, that of chemical products, only grew by 0.2%, due to a downturn in all the major markets apart from the USA.

For the calendar fiscal year begun on 1st January, Kao expects a new rise in revenue and profits.

The estimate for its 2016 net income is JPY120 billion, which would mean a 14.2% rise year-on-year. Operating income is expected to rise by 9.7% to JPY184 billion, while revenue should reach JPY1.510 trillion (+2.4%).